Thursday, January 23rd
2025 Online Stock Trading Platform Reviews
Robinhood
- Sherwood Snacks daily financial trading news for newbies
- Offers a no-fee Robinhood credit card with rewards
- Premium services offered at $5 per month
- Over 22 million users
- Fractional shares and crypto are available
- Under the Hood weekly podcast hosted by the CEO
- 24/7 chat support, phone support available 7 am to 9 pm ET
Robinhood's stock trading platform is dedicated to democratizing finance for everyone. When they first officially launched in April of 2013, they disrupted the entire industry by offering an app that would allow for trading with no commissions or minimum account balances. In the U.S., people can invest with no account minimums through Robinhood Financial LLC, a registered broker dealer (member SIPC), buy and sell crypto through Robinhood Crypto, LLC, spend and earn rewards through debit cards with Robinhood Money, LLC and credit cards with Robinhood Credit, Inc., trade US stocks without commission or FX fees in the UK through Robinhood U.K. Ltd., trade crypto in select jurisdictions in the European Union through Robinhood Europe, UAB, and can learn more about trading through Robinhood Learn. That's a lot to take in, but the short version is: Robinhood just about does it all.
Just the facts
- Costs
- ○ Commission-free on stocks, options, and ETFs
- Minimum Deposit
- $1
Robinhood is controversial
The founders of Robinhood have always been very transparent about their mission: to make trading accessible to everyone, not just the wealthy. When they decided to launch an app that had no commissions, it upset the big players in stock trading, ruffling a lot of feathers. Robinhood has been innovative in an industry that is very traditional. Not only that, they in effect threw down the gauntlet and hit the ground running. They intended to make the stock market accessible to millennials who had not yet generated a lot of wealth and who were completely ignorant of the world of financial markets. They even intended to make the whole experience, in their own words, "addictive." They succeeded. Industry professionals have complained since its inception about the "gamified” quality of Robinhood, the "dumbed-down” media arm of Robinhood, aptly named "Sherwood Media,” and they are generally extremely critical of this popular platform.
Controversy, fines and litigation
It's not surprising that with this controversial and unabashedly innovative approach to stock trading, there would be problems. Most recently, Robinhood agreed to change its "gamified” features on its app and pay a $7.5 million fine to settle charges with the Massachusetts Secretary of State Securities Division for violating the Massachusetts Uniform Securities Act. Previously, Robinhood was in hot water with FINRA for various violations that led to the largest fine in FINRA history - to the tune of $70 million. The settlement had critics in an uproar, but it also represented growth for the company, and it became a publicly traded company in July 2021, shortly after things were settled with FINRA. Unfortunately, since then it has been a pretty abysmal investment.
Younger, inexperienced investors like the platform
Robinhood's average age of investor is 32 years old, and they are happy with that - their mission is to reach millennials and younger people who'd like to invest but don't have accumulated wealth. The platform is simple to use and often irreverent, which appeals to the younger crowd. The weekly newsletter is geared toward younger people, too. That being said, with inexperience can come extreme reactions to success or failure. Sadly, one 22-year-old investor committed suicide after Robinhood mistakenly reported huge losses on his app. In reality, there were no huge losses, but it didn't stop the young man from believing he was financially ruined. In his suicide note, he blamed Robinhood for not warning him of the risks he was taking. Trading is inherently risky, but Robinhood's swashbuckling attitude takes the risk to another level. They do offer a premium service level, Robinhood Gold, priced at $5 a month, which includes NASDAQ Level II data and analyst reports from Morningstar, which might help an investor become more savvy.
Beautiful platform and mid-level customer service
We have to leave it to the Stanford graduates who created this controversial app-based platform - it is a beautiful piece of work, and most things can be done online and resolved before needing to talk to customer service. Robinhood offers 24/7 chat support and business hours support for phone customer service. Reports are mixed, with some customers saying they've had a delightful experience with customer service and their problems were readily resolved. Others have the opposite experience.
Gets industry criticism for good reason
Many innovators face scorn and ridicule from the establishment, but in this case, the industry's criticisms of Robinhood are somewhat justified. With the recent ruling against Robinhood's "gamified” approach to their app, past litigation, and numerous fines for legitimate problems, Robinhood seems to need more time to go from swashbuckling outlaw to law-abiding trendsetter. There is a lot of potential with this company, and we love the idea of making stock trading a more level playing field, where the divide between rich and everyone else is lessened or removed completely. We are pleased that Robinhood's mission forced the market to offer better deals and lower fees to their customers overall, but we'd like to see Robinhood make a track record of innovation with integrity before we can truly recommend it. For this reason, we give Robinhood stock trading platform one of our lowest ratings, with hopes that it will improve in the future as it matures.
More Online Stock Trading Platform Reviews
The 12 Best Online Stock Trading Platforms
Which Online Stock Trading Platform is the Best?
This can be an overwhelming question for beginning investors - but that's a great place to start. First, ask yourself what level of skills or knowledge you have in investing and what your purposes for investing are. Are you brand new to the financial world of stocks, ETFs, fractional shares, and options? Are you trying to manage a large amount of wealth? Are you looking for a safe place to grow your savings over the next few decades?
Or, are you someone who has had a lot of experience in investing and wants to get back into the game or take your game to the next level? Are you wanting to take high risks, or are you more conservative in your approach? There are plenty of options out there and there are some who focus on everything and some who specialize in one or two niche markets.
Online Stock Trading Platform FAQ
Continued from above...
For beginning traders, there are platforms that have devoted a big part of their online presence into education. Some have partnered with banks so you can do all of your investing along with your banking.
For active traders, the best platforms will have advanced charting capabilities, responsive customer service, robust toolkits, and they will also offer high-quality research resources. We highly recommend those platforms that allow for backtesting - a way to put in a particular strategy simulation and see how it might play out before committing to the trade in real life. Be sure to ask questions and double-check that whatever stock trading platform you use, they will have the tools that fit your particular needs.
For example, if you are going to be trading mostly on your mobile phone, you will want to make sure the stock trading company you choose has a strong mobile platform. Some companies do a bare-bones mobile app, and that would not be a suitable fit. Be sure to check if software platforms have a history of outages or glitches, too.
Are you the kind of investor who doesn't want to actually pull the trigger on choosing which stocks to buy on your own? You might want to look into robo-advisors or a dedicated financial advisor or team of advisors. These accounts usually come with fees as a percentage of the total amount invested, but it can be well worth the cost if you don't want to be involved in the day-to-day management and strategy on your account.
Most advisor accounts (robo or personal) involve you completing a questionnaire and/or a phone call that considers your time frame, financial goals, and risk tolerance. From there, the company will create a portfolio matching the information you gave. This portfolio will be rebalanced automatically, and you don't have to do a thing. On those types of accounts, you can find options with no fees, and the ones that do charge fees are usually much less expensive than working with a human advisor one-on-one.
Keep in mind that most of today's online stock trading platforms very proudly advertise that they charge "$0 fees." That usually just refers to a $0 commission fee. There will definitely be at least one or two fees for most accounts. Whether it's for withdrawal or broker-assisted transactions, there are going to be some extra costs associated with your account.
So, which online stock trading platform is best for you? Here are some of the criteria to keep in mind:
- Intended investment strategy. Are you an active day trader? A buy-and-hold investor? A conservative investor taking the slow and steady way to build a retirement? Are you willing to take risks? Are you a natural researcher or do you want someone else to do that for you?
- Ease of use. Is the website difficult to figure out? Is it easy to open an account, or do you have to go through a lot of extra hoops? Do you prefer to talk to someone on the phone, or is live chat your go-to way to communicate? Are there tutorials and online help for learning how to use the platform?
- Tools. Do you want lots of tools, or do you just want someone else to worry about it? Do you want to have an app that is integrated with your bank? Is there a mobile app? Is it web-based or downloadable? Can you connect with research resources that match your level of expertise?
- Customer service. What do other clients say about their experiences with the company? How are issues handled by customer service? Are the financial advisors helpful?
- Reputation. Is this a service with a long history in the financial industry or a relative newcomer? Is the company insured or backed by government or private agencies? Do they have a history of litigation or being fined by FINRA or other agencies? Are they transparent?
To help you make the most of your investments, Top Consumer Reviews has evaluated and ranked today's most popular online stock trading platforms. We hope this information helps you reach your financial goals!
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